For a while, it looked like the cruise industry was doomed. Especially after government responses to COVID-19 turned passenger cruises into plague ships without a country, exiled to at least six feet away from a dock. Royal Caribbean (NYSE:RCL) seems to have turned that around, though, and garnered a big new plaudit from Bank of America (NYSE:BAC).
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Bank of America, via analyst Andrew Didora and team, pulled Royal Caribbean stock up from Sell to Hold. The move was largely thanks to Royal Caribbean’s recent improvement on its balance sheet. Its earnings report turned out to be a mixed bag. However, things still looked up sufficiently for Bank of America to reassess. Royal Caribbean posted a loss of -$1.12 per share, which was better than the -$1.33 consensus estimates. Revenue faltered, though, coming in at $2.604 billion against consensus estimates looking for $2.605 billion.
However, as Didora and company pointed out, Royal Caribbean had an impressive Wave booking season. The season—which normally runs from January to March in a year—featured improved pricing that outpaced Royal Caribbean’s other competitors. Better yet, reports note that Royal Caribbean expected sufficient improvement that it upgraded capacity at its private island, CocoCay. Now, the island can accommodate 13,000 guests per day. Further, CFO Naftali Holtz noted Royal Caribbean would have 80% of its overall capacity sailing from North America. Most ships were to be headed to the Caribbean.
Overall, analyst consensus calls Royal Caribbean stock a Moderate Buy. However, it also comes with a 9.43% downside risk, thanks to its average price target of $68.11 per share.
